Unlike a “Short Put,” where your profit is capped at the premium you collect, a Long Put has massive upside. Because a stock can theoretically fall to zero, your put option can gain value until it hits the strike price.
The NVDA Math:
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Your Strike: $218.00
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NVDA Falls to $150: Your option (At Expiry) is worth $68 per share ($6,800).
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Net Profit: $6,800 – $3,040 (Cost) = $3,760.
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NVDA Falls to $100: Your option (At Expiry) is worth $118 per share ($11,800).
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Net Profit: $11,800 – $3,040 (Cost) = $8,760.
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